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So, where’s “mutual agreement” on this pension form?

Pensions and Employment speak different languages and as an employer it’s important to have a team working for you that understands both.

A recent example arose in the Pensions Ombudsman case of Mr. O (PO-7782).

Mr O worked for a local authority. Following an outsourcing and TUPE he was transferred to Capita Secure Information Solutions Limited. Unsurprisingly, Capita had some cost-cutting targets to meet and notified the Service Desk staff to say that there might need to be staffing reductions.

The staff in question were members of the Local Government Pension Scheme. This provides expensive-to-fund unreduced pension benefits where a member who is 55 or over:

• is made redundant;
• is dismissed on grounds of business efficiency; or
• leaves by mutual consent on grounds of business efficiency.

As Mr O was on sick leave at the time he agreed to a compromise agreement with a £25k payment in exchange for leaving his employment. In his case a pensions top-up would have cost Capita an extra £50k.

Capita had to fill in a form saying what the reason for Mr O’s departure was. This caused issues. Capita tried to say it was by “mutual agreement” but the relevant LGPS form didn’t have that as an option.

It then tried “redundancy” but realised this was an error (and would have triggered the pension benefits). It then ran with “resignation”. The Ombudsman looked at the facts, ran them against the only options available on the form and ordered Capita to resubmit it with “mutual consent on grounds of business efficiency” as the reason. Mr O got his unreduced pension costing Capita £50k and his £25k as well.

There’s always more to these things, but the key thing for this blog entry is to make sure you’re clear on what your pension scheme provides on leaving service. If you have any early retirement/redundancy provisions, they could leave you with an unexpected and very unwelcome bill even if you’ve got all your employment ducks in a row.

So, where’s “mutual agreement” on this pension form?

Suspension for alleged misconduct may be a breach of contract

In the recent case of Agoreyo v. London Borough of Lambeth [2017] EWHC 2019 (QB), the High Court has held that suspension as a "knee-jerk" reaction to an allegation of misconduct may in itself be sufficient to breach the implied contractual term of trust and confidence.
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Suspension for alleged misconduct may be a breach of contract

We need a holiday from the holiday pay cases!

In the latest in a number of cases dealing with the calculation of holiday pay, the Employment Appeal Tribunal (“EAT“) has held, in the case of Dudley Metropolitan Borough Council –v- Willetts, that pay for voluntary overtime normally worked constitutes “normal remuneration” for the purposes of calculating holiday pay provided for in the Working Time Directive (20 days).

The EAT rejected Dudley Council’s restrictive interpretation of the recent seminal cases of Williams and Lock. Dudley Council sought to argue that these cases demonstrated that the overtime payments were not “normal remuneration” because they were not intrinsically linked to the performance of the tasks the Claimants in this case were required to carry out under their employment contracts. The EAT found that this link did exist since the Claimants were performing the same tasks when they worked overtime as they did when performing their usual duties.

In reaching its decision, the EAT considered what it called “the overriding principal of EU case-law”, this being that normal remuneration must be maintained so that pay in respect of annual leave corresponds to remuneration while working. To not include this voluntary, but frequent, overtime in the calculation of holiday pay would be to potentially deter a worker from taking annual leave – which is exactly what the legislation (and the case law flowing from it) is intended to prevent. It seems therefore that the reverse is the case. Not only must taking holiday not be detrimental to an employee but it may, in fact, result in a windfall since, had the employees not been on annual leave, they may have chosen not to work the overtime in any event. It remains to be seen, however, how frequently overtime has to be worked before it becomes “normally worked”.

The full case report can be found here:  http://www.bailii.org/uk/cases/UKEAT/2017/0334_16_3107.html

 

 

We need a holiday from the holiday pay cases!

SOSR – A low threshold for a fair dismissal?

Of the five fair reasons for dismissal, ‘some other substantial reason’ (SOSR) is often viewed as a ‘catch all’ justification for dismissal. It does not give an employer freedom to dismiss for an irrelevant or trivial reason. However, the threshold to meet in order to be able to rely on an SOSR dismissal appears not to be prohibitively high in light of the recent case of Ssekisonge v Barts Health NHS Trust UKEAT/0133/16/LA.
Ms Ssekisonge was a registered nurse who worked for a number of NHS Trusts. She came to the UK and obtained indefinite leave to remain and then British citizenship. Her citizenship was revoked when the Home Office had concerns regarding her identity. Ms Ssekisonge did, however, retain her leave to remain. Following a disciplinary process, the NHS dismissed her, again due to concerns over her identity.
The Employment Tribunal found the principal reason for the dismissal was that the NHS could not determine Ms Ssekisonge’s identity and the risk that this posed was sufficient to justify her dismissal for SOSR. Ms Ssekisonge appealed the decision but the Employment Appeal Tribunal (EAT) upheld the first instance decision. Certainty over an employee’s identity was essential for a nursing role. The EAT rejected an argument that employers should go further than they might otherwise do when dismissing for SOSR where there is no fault on the part of the employee.
It is important to remember each case is fact sensitive. In particular the claimant in this case was waiting for the outcome of the Home Office investigation in relation to her identity and the NHS Trust was not expected to investigate further in the meantime. Employers should also be aware of their duties to check a job applicant’s ‘right to work’ documents.

SOSR – A low threshold for a fair dismissal?

Employment Status Checker

HMRC has published an employment status checker so that employers can check whether the IR35 legislation on intermediaries and ‘disguised employees’ will apply to a particular engagement. The tool determines if, on the basis of the facts given, a person is employed or self-employed for tax or NIC purposes.

The IR35 legislation only applies if the worker would be an employee of the entity if they worked directly for it, not an intermediary. The tool can be used to check current or future engagements in the private or public sector.

HMRC affirms that they will stand by the result unless it is subsequently shown that the information provided is inaccurate or contrived to achieve a particular outcome. Currently the tool allows you to obtain an outcome of non-applicability of IR35 legislation if you include a right of substitution in your employment arrangement – which leads to the question of whether always including a right of substitution would constitute a contrived outcome. Due to these mechanical issues, there will be many who question the usefulness of a tool that is so easily manipulated, and who will query the extent to which the tool actually reflects the approach of HMRC for determining employees’ status for tax purposes.

Employment Status Checker

Online employment tribunal judgments

The “Employment tribunal decisions” website has now been launched and there are already three pages of decisions that have been uploaded (currently decisions from 2015 onwards). The launch of this website will make getting hold of tribunal decisions much easier. However, the public nature of the decisions will no doubt be a factor for both employers and employees to consider before going to tribunal, as any negative findings will now be widely available and could damage reputations.

Click here to go to the website.

Online employment tribunal judgments

Working up a sweat?

A recent study by The Lancet, the independent medical journal, has found that physical inactivity in the workplace can pose dangers to a workforce. To combat this, the study suggests that one hour of moderate exercise each day is enough to offset the side effects of a typical sedentary working day. Many (typically larger) employers have already taken the decision to promote exercise and healthy living in the workplace by offering free or discounted gym memberships and setting up sports clubs. A recent trend has also been to introduce customised desks with treadmill or pedalling devices to keep employees active and encouraging employees to conduct “walking meetings”. It is reported that Google has even created a new 90 m indoor running track at its London headquarters.

What’s sure is that employers are becoming more alive to employees’ health and wellbeing in the workplace and this looks set to continue in the future. We consider that it is in employers’ interests to promote active lifestyles, as a healthier workforce should mean fewer issues for employers in managing sickness absence. The non-profit organisation ukactive has even called for the government to consider tax breaks for companies offering these perks to employees.

Working up a sweat?

We’ve launched!

We are excited to launch our new Dentons UK Employment Hub. The Hub aims to keep you up to date on the latest developments in UK employment law and HR related issues. It offers a range of resources, including our blog, featuring current news and legal developments, articles, and details of our seminars and other events.

Our team has extensive experience advising on all aspects of employment law, including both contentious and non-contentious matters. We work with national and international clients, from our London and Milton Keynes offices, across a wide range of sectors, and have developed particular expertise advising financial services and retail clients.

We’ve launched!